London-listed bank Standard Chartered is set to fork out a total of £416million to settle US claims it breached sanctions with Iran.

The bank, whose main operations are in Asia, was hit by lurid claims from New York regulators in August that it had exposed the US to terrorists and drug kingpins by carrying out £160billion of secret transactions with Tehran.

The case followed a series of hammer
blows this year to London’s reputation as a financial centre, including
revelations that HSBC allowed rogue states and Mexican drugs cartels to
launder billions of pounds through its branches, and the Libor
rate-fixing scandal at Barclays which also looks set to drag in several
other banks.

Iran claims: Standard said the payment would push down pre-tax profit growth

Today, Standard said it expects to pay another £205 million on top of the £211million sum already paid to New York's Department of Financial Services to settle the Iran claims.

Standard, which employs nearly 90,000 people worldwide and sponsors Liverpool Football Club, was initially threatened with losing its licence to operate within New York state when the scandal broke last summer.

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In an explosive legal order, New York regulator Benjamin Lawsky claimed it 'operated as a rogue institution'.

Standard, between January 2001 and 2010, moved 60,000 transactions through its New York branch that were subject to US economic sanctions, and then covered up the dealings, the financial watchdog claimed. Institutions included the Central Bank of Iran as well as Bank Saderat and Bank Melli, both of which are also Iranian state-owned.

The US suspects that the Gulf state was using its banks to finance 'terrorist groups' such as Hezbollah, Hamas and the Palestinian Islamic Jihad.

Findings include a memo sent in October 2006 from the bank's US chief executive to the group executive director in London, raising concerns about the activities with Iran.

The group executive director allegedly replied: "You ****ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"'

The watchdog, which reviewed 30,000 pages of documents during the investigation, also uncovered evidence of apparently similar schemes at the bank with other US-sanctioned countries such as Libya, Burma and Sudan.

The 160-year-old lender said today that the New York settlement would push pre-tax profit growth down to a 'mid-single digit rate' rather than in the double-digit range.

Standard has no UK branches but is headquartered in London, a key hub for its wholesale banking business.

Its shares were up 1 per cent or 11.25p at 1,499.75p after the update as analysts said it removed some uncertainty around the impact of the scandal.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: 'The implication from the bank's statement is that the US situation is very close to a resolution, which is also likely to be less costly than for some of its rivals.

'To remove such uncertainty is a positive sign and allows investors to refocus on the business.'

Stock watch: Standard shares have recovered much of the ground lost in August